Axios Markets

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February 10, 2022

👋 🌅Well, good morning there friends! Today we've got our inflation hats on. At 8:30am ET we'll get a look at the January Consumer Price Index. Read on for the rest — Matt has thoughts on those Canadian truckers.

Today’s newsletter is 1,100 words, 4.5 minutes.

1 big thing: Gensler's big ambitions

Photo illustration of Gary Gensler and the SEC seal.
Illustration: Aïda Amer/Axios

SEC chair Gary Gensler had a big day yesterday, as his agency proposed a new level of transparency for private market funds, new rules around cybersecurity reporting, and announced it was considering a change in "market plumbing," a direct response to last year's meme stock mania, Emily and Matt write.

Why it matters: Gensler's moves are just the latest sign that the former banker isn't letting up on his efforts to police the markets; with 50 new rule proposals expected this spring.

  • It's the largest regulatory push in decades, as CNBC noted.

Driving the news: The agency proposed new rules requiring private equity firms and hedge funds to issue detailed quarterly statements to investors, disclosing fees, as Axios' Dan Primack reported.

What they're saying: Hedge funds and private equity firms, which are subject to far less scrutiny than public companies, point out their investors are sophisticated — e.g., "leave us alone," Primack explains.

  • “We are concerned that these new regulations are unnecessary and will not strengthen pension returns or help companies innovate and compete in a global marketplace," Drew Maloney, CEO of American Investment Council, a private equity trade group, said in a statement.
  • The FT editorial board welcomed the news, PE is too important to be this opaque, it said.

Gensler also said the agency is considering shortening trade settlement times to just one day, or T+1, as Emily reported.

  • This is partly a response to last year's meme stock frenzy. Back then, Robinhood actually blamed T+2 for forcing it to curtail meme stock trading — though Axios' Felix Salmon explained why that excuse was a bit dodgy.
  • The move to shorten trade times is less controversial and more welcomed but won't go into effect until 2024. There are a lot of players involved behind the scenes when a trade is executed — retail brokerages, intermediaries and clearinghouses.

“It's like a Broadway musical where you have to have all the dancers kicking at the same time," said James Angel, a finance professor at Georgetown University. 

Flashback: It's a year and change since Robinhood CEO Vlad Tenev asked for shorter trade settlement times (on Twitter, of course).

What we're watching: It's going to be a busy spring for SEC watchers. Gensler's looking at regulations in ESG, insider trading, executive compensation, board diversity and more.

2. Catch up quick

⚖️ California accused Tesla of racial discrimination in a lawsuit. (Axios)

🐭 Disney posted strong quarterly profits on parks and streaming. (WSJ)

🚚 Why America doesn't have enough truck drivers. (NYT)

🏦 Susan Collins is the first Black woman to lead a Fed bank. (Axios)

3. 🍁 All eyes on convoy in Canada

Data: FactSet; Chart: Thomas Oide/Axios

Just as American auto manufacturers showed signs of momentum in beating back supply chain snarls, Canadian anti-vaccine protestors are blocking a key connection to Detroit, Matt writes.

Driving the news: The convoy of Canadian truckers that shut down Ottawa recently to protest vaccination requirements and public health measures closed a key bridge connecting Canada to the U.S. for a fourth day today.

Why it matters: The Ambassador Bridge — which connects Windsor, Ontario, to Detroit — carries 25% of all trade between the two countries, according to the AP.

Context: The chaos along the typically placid border comes just as the American auto industry — which depends on suppliers and producers in both countries — starts to shake-off supply chain-related woes.

  • Ford and Toyota have already halted some production.
  • After crashing at the end of 2021, the pace of car sales jumped in January, rising to an annualized pace of more than 15.5 million.

Disorderly Canadian truckers aside, the pipeline of sedans and pickups has been filling up fast. Inventory data released yesterday showed the largest rise in U.S. wholesale car inventories in a decade — a good sign for those hoping to see car prices decline.

4. That was fast: Labor markets rebound

Data: Haver Analytics and Moody's Investors Service; Chart: Axios Visual

Oh, snap! Labor markets in advanced economies bounced back super-fast relative to pre-pandemic levels, but the U.S. is slightly behind, Emily writes.

Why it matters: Consider it took years for jobs to come back after the 2008 financial crisis. This is like no other economic recovery in history, said Claire Li, an assistant vice president at Moody's who helped put together this data.

Context: Though we're lagging on this bounce-back measure — the U.S. unemployment rate is actually lower than in several of these countries, including Canada and Australia, a separate Moody's analysis shows.

  • Lingering COVID worries are keeping workers home in the U.S. That's because they have caregiving responsibilities or they're older and are worried about getting sick — and long COVID, too.
  • The United Kingdom and Euro area are ahead partly because of the way they headed off job losses at the start of COVID, using fiscal relief to keep workers attached to the job market — instead of paying unemployment benefits to workers.
  • Canada's stellar recovery might have something to do with the fact that our neighbors to the north haven't seen as many COVID deaths or cases, Li said. (Canadian readers email me with more info please.)

The bottom line: The labor market recovery here has Larry David vibes: It's pretty...pretty...pretty good but specific COVID issues hold the U.S. back.

5. Charted: House traders

Note: Excludes representatives no longer in Congress. Data: House Stock Watcher; Table: Thomas Oide/Axios

Bipartisan momentum is building around legislation that would ban lawmakers from owning and trading individual stocks, Axios’ Stef Kight writes.

Why it matters: The ability of members of Congress to actively trade has long raised questions about conflicts of interest because they have the power to move markets.

State of play: An Axios analysis of data from the House Stock Watcher shows that Rep. Josh Gottheimer (D-N.J.) has reported more stock purchases and sales during the past two years than any other member of the U.S. House of Representatives.

  • The House Stock Watcher compiles reports filed by members and presents them in a manner more readable than the original PDFs.

By the numbers: Of the top 10 House members who've made the most trades in the past two years, seven are Democrats.

  • Gottheimer mostly traded stock in the tech sector — $75 million out of $81 million invested — and the vast majority of his transactions were in the lowest $1,000-$15,000 range.
  • “Prior to taking office, Josh turned over management of his portfolio to a third party and only receives statements of prior transactions," a spokesperson told Axios.
  • While Pelosi didn't make the top 10 for the number of individual transactions she has had to disclose, 33 of the 57 transactions — made by her husband — were over $500,000. That included 11 over $1 million.

Read the full story.